Now this took me a bit longer to figure out then what I would like to admit, but to be fair when you first get involved with cryptocurrency it is a very intimidating process. It doesn't matter if you are just buying a few coins or trading on an exchange, when your are new to the world of decentralized currency it seems like there are easy mistakes that can be made everywhere that can cause you to lose coins.
With no "undo" option once a payment is sent, there is no getting it back if there is a mistake in the address or if you send it to the wrong currency wallet. Without an institutional hotline like you have with your bank there is no one you can call if you mess up or become stumped. For this reason I think people struggle getting involved especially if they aren't the most technically inclined. There is a definite learning curve to cryptocurrency and this can easily turn people away especially considering there is real money on the line. That being said once you do decide to purchase some coins you are beyond vigilant. You will find yourself reading over the address multiple time, refreshing the page to make sure everything is updated and making sure you converted everything correctly to avoid overpaying or sending the wrong amount. Because of all this stress it is very easy to overlook smaller details that are not as critical, but over time it can really start to add up.
Living in Canada has its own difficulties when purchasing cryptocurrency. When depositing money from your bank to your exchange account all of the prices are in CAD. I have found dealing in the Canadian Dollar to be very annoying as all of the prices, charts and news articles use the USD as the base currency for comparison. As a result of this you are unable to easily monitor prices to find a good deal as you are constantly having to convert the current price along with your account balance over to USD before making the trade.
Besides all of that one aspect that is constantly overlooked by new traders are the deposit and withdrawal fees that the different exchanges charge. When you send your first bitcoin you are so focused on making sure that the transaction information is correct that you can completely overlook the real killer which are the transaction fees. Now the fees vary of coarse from company to company, but one of the reasons I think the fee amount is constantly overlooked is due to the format that it's displayed in. For example if I wanted to withdraw Bitcoin from my Bittrex wallet you will notice right at the bottom in small print a "Tx Fee" section with 0.001 BTC locked in. Now of coarse at first glance that doesn't seem like a whole bunch so you will likely hit send without thinking about it, just like I did for a long time. But once you convert that BTC fee to USD you notice that it is a lot more than you realize. With the price of Bitcoin around $18,000 USD that tiny little 0.001 BTC becomes an $18 transaction fee. If you are moving tens of thousands of dollars around you wouldn't think twice about it, but if you are like me and generally move around smaller amounts of money more frequently that $18 will eat through your account balance pretty quickly.
After I had taken notice of this I started to look for ways to avoid those massive fees in order to save as much money as possible. To give you a better understanding of the solution that I found I have listed the deposit and withdrawal fees from Bittrex and Bitfinex, two of the largest online exchanges available today:
Bittrex Deposit Fees | Bittrex Withdrawal Fees |
|---|---|
| Bitcoin = No Fee | Bitcoin = 0.001 BTC |
| Bitcoin Cash = No Fee | Bitcoin Cash = 0.001 BCH |
| Ethereum = No Fee | Ethereum = 0.001 ETH |
| Monero = No Fee | Monero = 0.04 XMR |
| Bitcoin Gold = No Fee | Bitcoin Gold = 0.001 BTG |
Bitfinex Deposit Fees | Bitfinex Withdrawal Fees |
|---|---|
| Bitcoin = 0.0005 BTC | Bitcoin = 0.0005 BTC |
| Bitcoin Cash = 0.0001 BCH | Bitcoin Cash = 0.0001 BCH |
| Ethereum = 0.01 ETH | Ethereum = 0.01 ETH |
| Monero = 0.04 XMR | Monero = 0.04 XMR |
| Bitcoin Gold = No Fee | Bitcoin Gold = No Fee |
As you can see in the chart above Bitcoin is by far the most expensive cryptocurrency that you can deposit and withdraw at up to $18 a transfer. This is followed by Monero at $17 and Ethereum at $8, all of which would take a decent chunk out of your account balance especially when transfering only $100 or so.
Now this is what I have been doing instead and even though it may be a bit of an inconvenience it has saved me a substantial amount over time. Lets say I want to transfer .01 BTC from my Bitfinex wallet to my Bittrex wallet. Instead of transferring it directly from Bitcoin to Bitcoin I convert it to the cheapest and fastest coin first. Personally I am a big fan of Bitcoin Gold as the fees are extremely low (if not free) and very fast compared to Bitcoin which takes substantially more time to complete the transaction. So I take the .01 BTC and sell it for $180 USD then trade that for .45 of Bitcoin Gold.
At this point you can transfer the Bitcoin Gold over to your wallet and depending on the exchange you will be charged at most $0.40, if not free all together. All that is left for you to do is then trade the .45 BTG back for your original .01 BTC and BAM, just like that you have avoided the $18 fee and paid only $0.40 instead. Now I realize that some people would not have the patience to go through this many steps but when it comes to sending smaller amounts to different wallets I believe that this is your best choice.
Thank you for taking the time to read this and if you have any thoughts or opinions just leave a comment below.
Until next time!
Sincerely,
Grayson